Question: Gomez Electronics needs to arrange financing for its expansion program. Bank A offers to lend Gomez the required funds on a loan in which interest

Gomez Electronics needs to arrange financing for its expansion program. Bank A offers to lend Gomez the required funds on a loan in which interest must be paid monthly, and the quoted rate is 8%. Bank B will charge 9%, with interest due at the end of the year. What is the difference in the effective annual rates charged by the two banks?

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